Litecoin’s rewards for miners are about to be cut in half. It will happen on next August 8th, and it’s an important thing, Let us tell you why.
It’s all about the blocks
Let’s start with the mining process.
Litecoin’s mining process is a lot like Bitcoin’s, only much more manageable. Hence the name.
You could think that the whole point in mining is to produce new tokens. You’d be wrong. Every cryptocurrency’s underlying technology is called blockchain. It’s called that because it’s made up of a chain of blocks. This is the thing that makes every digital coin functional, the engine under the hood.
So the point in mining is to create new blocks for the chain. Those miners who do manage to come up with new blocks get rewarded with some coins. But the point, at least technically, is to keep expanding the blockchain so that it can keep working. New tokens are just a nice side-effect.
There’s another feature in the process. Every now and then, successful miners will get only half of the previous reward. This process is hardwired into Litecoin’s (and Bitcoin’s) blockchain, and the objective is to keep the cryptocurrency in question scarce.
Only so many Litecoin LTC tokens will ever exist. And as the network keeps producing new ones, the process will become slower. Why? Because scarcity creates deflation, it hence keeps the coin’s value high. We see this in the real world all the time with gold and silver.
Because the precious metals supply is limited, they rarely fall in value. And this is one of the advantages that some cryptocurrencies have over fiat currencies. Any government in the world (or, more accurately, any central bank) can print as many banknotes as it wants.
Of course, if they overdo it, that will create inflation. The point is that minable cryptocurrencies’ values are backed by something (the miner’s work) while fiats are only supported by the central bank’s promise that they’re worth something. The gold standard has been gone since the Nixon days.
Halvings in the Litecoin network come about every 840k blocks. It’s expected that the system will hit the new milestone on August 8th.
There’s another crucial thing you need to know. Every time a halving materializes, the coin’s prices go up considerably. It’s happened so far every time BTC cuts its rewards in half, and the same goes for Litecoin (LTC). So the next weeks could be an excellent opportunity for savvy investors to accumulate LTC coins and then sell them when the price goes up, most probably by August’s second week.
So keep an eye open for Litecoin’s market behavior. It’s been doing well lately anyway, so the chances are that you won’t be wasting your time. As for buying… it’s up to you. You need to do your own research, make sure you understand the mining process and how the market reacts to it.
Litecoin is the world’s fifth largest cryptocurrency by market capitalization, and it’s trading at USD 1133.5 as we write this. The trend right now is bearish (as the whole market is down after today’s Bitrue hack). Which only means you can buy it more cheaply. But you have to decide on your own.
Disclaimer: The presented information is subjected to market condition and may include the very own opinion of the author. Please do your ‘very own’ market research before making any investment in cryptocurrencies. Neither the writer nor the publication (TronWeekly.com) holds any responsibility for your financial loss.